Marketing II
The Chang School-Ryerson University
Continuing Education
CMKT 200 Fall 2005
Instructor: Armand Gervais
Email: agervais@ryerson.ca preferred
Web: www.ryerson.ca/~agervais
Office: Bus 308
Phone: 416-979-5000 Ext 4215
© 2003 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin
Lecture Agenda






Don’t Forget Name Tags
Global Marketing
Break
Simulation
To Do’s for next weeks class
Time to work in Groups
How Global Brands Compete




Theodore Levitt declared that a global market for
uniform products and services had emerged
He argued that corporations should exploit the
economies of simplicity and grow by selling
standardized products all over the world
Global branding was about saving costs and ensuring
consistent customer communication
However consumer in most countries had trouble
relating to generic products and communications that
resulted from the least common denominator thinking
Global Brands





62 of the world’s 100 most valuable brands were
American
Most people choose on global brand over another
because of differences in the brands global qualities
Rather than ignore the global characteristics of their
brands, firms must learn to manage those
characteristics
This is critical because most future growth will come
from foreign markets
By 2030 the planets population will rise to 9 Billion
with 90% of people living in developing countries
Dimensions of Global Brands

The Global Brands Study revealed that
consumers all over the world associate global
brands with three characteristics and evaluate
them on those dimensions while making
purchase decisions. The study also found that
one factor American Values didn’t matter much
to consumers
Quality Signal




“The more people who buy a brand the better quality it
is”
Consumers also believe that transnational companies
compete by trying to develop new products and break
through technologies faster than rivals
Until recently, peoples perceptions about quality for
value and technological prowess were tied to the
nations from which products originated
Increasingly a company's global stature indicates
whether it excels on quality
Global Myth



Consumers llok to global brand as symbols of
cultural ideals.
They use brands to create an imagined global
identity that they share with like-minded people
“Local brands show what we are; global brands
show what we want to be
Global Responsibility





Consumers expect firms to address social problems
linked to what they sell and how they conduct business
People have become convinced that global brands have
a special duty to tackle social issues
Consumers don’t demand the same of local brands
When we measured the extent to which consumers
purchase decision were influenced by products’
American roots we discovered the impact negligible
Why Consumers Pick Global Brand
8%
12%
Quality
Global Myth
Social Responsibility
44%
4 Global Segments




Global Citizens. 50 % of respondents, on average, rely on the global success of a
company as a signal of quality and innovation. At the same time, they are concerned
whether companies behave responsibly on issues like consumer health, the
environment, and worker rights. According to our study, the United States and the UK
have relatively few global citizens, and Brazil, China, and Indonesia have relatively high
numbers of them.
Global Dreamers. 23%, consisted of consumers who are less discerning about, but
more ardent in their admiration of, transnational companies. They see global brands as
quality products and readily buy into the myths they author. They aren't nearly as
concerned with those companies' social responsibilities as are the global citizens.
Antiglobals. 13% of consumers are skeptical that transnational companies deliver
higher quality goods. They dislike brands that preach American values and don't trust
global companies to behave responsibly. Their brand preferences indicate that they try
to avoid doing business with transnational firms. The antiglobals' numbers are
relatively high in the UK and China and relatively low in Egypt and South Africa.
Global Agnostics. Such consumers don't base purchase decisions on a brand's global
attributes. Instead, they evaluate a global product by the same criteria they use to Judge
local brands and don't regard its global nature as meriting special consideration.
Global Branding


Branding must cater to people's perceptions of
transnationals as behemoths with extraordinary
capacities and power.
For example, in the late 19905, Samsung launched a
global advertising campaign that showed the South Korean giant routinely pulling off great feats of engineering, design, and aesthetics. Samsung convinced
consumers that it competed with technology leaders
like Nokia and Sony across the world. As a result,
Samsung was able to change the perception that it was a
down-market brand, and it became known as a global
provider of leading-edge technologies.
Samsung-As good as it Gets













1.
2.
The economist Jan. 13 2005
Poised to overtake Motorola as the world’s second largest maker of mobile phones
1997 during the Asian economic crisis Samsung was deep in debt and heading towards
bankrupcy
The company’s strategy is based on providing leading edge stylish products that can be
sold for a premium
2005 Annual profit of 9.5 Billion
R&D 2.9 billion in 2003 8% of revenue
More than 20,000 of Samsung's 88,000 employees work as researchers in 15 R&D
centers around the world
More and more money will be spent on brand building
10 years ago Samsung was seen as a producer of cheap TV
Used product placement in movies like the Matrix to build brand
Marketing budget 3 Billion
According to Interbrand the value of Samsung’s brand is now close to Sony’s
Two things allowed Samsung to transform itself
Transition from analogue to digital
Convergence
Samsung Revenues
Marvelous Mobiles



South Korea where 75% have mobiles 20% buy
a new handset every 7 months (Porters factor
conditions)
Samsung was the first to popularize the
clamshell design
First to produce phones that work with both
CDMA and GSM systems
Samsung shares
Screen Tests







LCD prices are falling
A 32 inch LCDTV sold for $3,800 U.S. a year ago now sells for
$2,400
Phillips and LG formed a joint venture
Samsung and Sony will join forces to build a seventh generation
LCD factory
In the mid 1990’s more than a third of Samsung’s business came
from supplying other companies like Sony, Dell and Nokia
Samsung on the other hand make most of its own components
or buys them from with the group of companies to which it
belongs
Samsung is part of Chaebol, one of the giant faminly controlled
conglomerates that, with government backing built up South
Korea’s economy after the war
Coca Cola
“Gone Flat”, Business Week, 12/24/2004 issue 3913
pg.76
 CEO Neville Isdell came out of retirement
 3rd quarter earnings for 2004 fell 24%
 Various CEO’s have made little progress to meet the
rising challenges of carbonated drinks
 The culture of Coke is one that focused on doing what
Coke had always done but better.
 Meanwhile Pepsi had a much different view of the
marketplace Hint its not just about cola
Frozen in Time



Isdell believes that salvation lies in turning up
operations and capitalizing on existing brands
Same playbook as the previous CEO Roberto
Goizueta!
Under Goizueta 16 year reign the stock soared
3500% Annual earnings growth of 18% 1990-97
Bottler Friction










Coke imposes a 7.6% price hike on bottlers in the late 90’s
Some bottlers are beginning to push back with their own price hikes
Others refused to carry some of Coke’s new noncarbonated offerings like
mad river teas and planet java coffee
Company unwavering focus on the hallowed four Coke, Diet, Sprite and
Fanta
Coke’s sodas constitute 82% of its worldwide beverage sales
Consumers are increasingly reaching for anything but soda
Sport and energy drinks, coffee and teas, etc
Per capita cola consumption in the U.S. has declined every year since 1998
Coke PowerAde has 17% vs. Pepsi Gatorade 81%
Margins on new category is lower than Colas
Marketing and Brand





Resources shifted away from advertising and into
blanketing the world with vending machines, coolers
and trucks
The goal was simple ubiquity while the niceties of
brand building were ignored.
There was no vision no marketing
Ivestor believed the Coke brand was powerful enough
to sell itself
Starbucks can charge $2 for coffee Coke can barely sell
a 12-pack for $2 !
Coke vs. Pepsi
Break down of Coke’s issues
MORIBUND MARKETING

Once world-class, critics say that today the soda giant has become too conservative, with Norman
Rockwell-like ads that don't resonate with the teenagers and young adults that make up its most
important audience.
FRICTION WITH BOTTLERS

Over the past decade Coke has often made its profit at the expense of bottlers, pushing
aggressive price hikes on the concentrate it sells them. But key bottlers are now fighting back with
sharp increases in the price of Coke at retail.
MEDDLING BOARD

Coke's star-studded group of directors, many of whom date back to the Goizueta era, has built a
reputation for meddling: Some insiders believe the last CEO, Doug Daft, never recovered after
the board unexpectedly vetoed his 2000 deal for Quaker Oats.
LACK OF INNOVATION

In the U.S. market, Coke hasn't created a best-selling new soda since Diet Coke in 1982. In recent
years, Coke has been outbid by rival PepsiCo for faster growing noncarb beverages like SoBe and
Gatorade.
INTERNATIONAL WORRIES

Coke desperately needs more international growth to offset its flagging U.S. business, but while
some markets like Japan remain lucrative, in the large German market Coke's had so many
problems it's rebidding all bottling contracts in 2007.
To Do’s for Next Class


Before you leave today sign attendance sheet
Email me your contact information Student ID, Email, and
contact number


Please include a little about yourself:
Program, Major, work experience etc.

Complete the assigned readings download through library
Form teams and review simulation

www.marketplace6.com

© 2003 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin